CEO’s review Q4/2022

Esa Mäki, CEO:

“Apetit Group’s operating profit increased substantially year-on-year in the fourth quarter due to the positive profit performance of the Oilseed Products business. In Food Solutions, the result was largely on a par with the comparison year. The improved result of Oilseed Products was due to increased selling prices and the successful procurement of raw material. The result of Food Solutions was adversely affected by increased raw material costs. Net sales increased year-on-year in both businesses in the fourth quarter.

Apetit Group’s comparable full-year net sales increased substantially from the previous year. Higher costs being passed on to selling prices was a factor in the growth of net sales. In Food Solutions, sales volumes grew in the food service sector and exports, while retail volumes remained at the high level seen in the comparison period. In Oilseed Products, net sales were increased by the successful pricing and high market prices, in spite of the sales volume not reaching the record-high level of the comparison period due to a shortage of raw-material.

Full-year operating profit was lower than in the previous year. The Group’s result was negatively affected by higher raw material and energy costs. Increased costs could only be passed on to selling prices with a delay.

Inflation is reflected in food prices. According to Statistics Finland (consumer price index, 13 January 2023) food prices in December 2022 were 16 per cent higher than a year earlier. Prices have increased particularly for grain products, but also for fresh vegetables. Consumer caution and declining purchasing power may have a negative impact on consumption. Apetit’s brand and products have maintained a strong position in retail. Apetit is the only Finnish operator in the frozen vegetable business and the only Finnish company producing vegetable oils at the industrial scale. Apetit’s products correspond to the prevailing food trends and are competitively priced in the current circumstances, where a growing number of consumers are becoming more prudent with their spending.

A significant renewal effort was carried out at the Pudasjärvi frozen pizza plant in summer 2022. We began to challenge foreign competitors in the frozen pizza category by launching sourdough pizzas with high-quality ingredients. The new frozen pizzas have been available in shops since October. The new pizzas have been well received and the sales have been in line with our targets.

In the development of our rapeseed-based plant protein, BlackGrain, we focused on developing the production process. BlackGrain is a great example of the potential held by Finnish plant-based raw materials for promoting sustainable eating habits. In the Oilseed Products business, we aim to not only enhance the added value of our products but also increase the cultivation of oilseed plants in Finland to a sustainable level. According to Natural Resources Institute Finland, the domestic oilseed plant harvest was approximately one-third higher than the previous year.

In spring 2022, we announced that we will modernise the energy solution at our Säkylä plant. The new energy solution will significantly improve energy efficiency through heat recovery. The new energy solution will reduce the annual CO2 emissions of the Säkylä plant by up to 80 per cent. Together with the bioenergy plant at the Kantvik vegetable oil milling plant, the new energy solution in Säkylä will
enable us to take significant leaps towards our target of reducing emissions by 75 per cent by 2025. At the end of 2022, we have already reduced our own direct emissions from the comparison year 2019 by more than 70 percent.

We will launch a strategically important ERP system renewal project in 2023. This renewal of the Group’s ERP system has been carefully prepared. The project is progressing in accordance with the project plan.

Apetit published its renewed strategy on 15 November 2022. The main message for the strategy period 2023–2025 is Growth from diverse plant-based food products. Our renewed strategy is a natural continuation of the past strategy period, during which we strengthened our core activities. We work in close collaboration with domestic primary production, and cooperation with domestic growers is the cornerstone of our business.”